How much does regional integration contribute to growth? An analysis of the impact of domestic market integration on regional economic performance in China (1997–2011)

How much does regional integration contribute to growth? An analysis of the impact of domestic market integration on regional economic performance in China (1997–2011)

Hong, Tao (Harbin Institute of Technology)
Yu, Nannan (Harbin Institute of Technology)
Storm, S.T.H. (TU Delft Economics of Technology and Innovation)
Gao, Bo (Nanjing University)

2019

This study analyses domestic market integration’s (DMI’s) dynamic influence on regional economic growth in China. The authors construct a matrix of annual DMI indices for 29 provinces for 1997–2015. They calculate the reciprocal matrix and combine it with the β-convergence model and spatial econometrics to analyse the relationships between DMI and regional economic growth. Their findings indicate that the relation between these two variables is not straightforward, and 2004 was a tipping-point year. Before 2004, the statistical relationship between DMI and regional economic growth was downward sloping, which suggests a trend of divergence and negative spillover effects across the 29 provinces. After 2004, the relationship between DMI and regional economic growth becomes positive: increased DMI now is strengthening (regional) economic growth. The authors provide the possible explanations for the unstable relationship combined with China’s reality as well.

economic growth
market integration
spatial autoregressive model
spatial error model
β-convergence

http://resolver.tudelft.nl/uuid:166174a1-9061-4d7f-9bb5-50264a28e465

https://doi.org/10.1080/1331677X.2019.1592006

1331-677X

Economic Research-Ekonomska Istrazivanja, 32 (1), 3183-3204

Institutional Repository

journal article

© 2019 Tao Hong, Nannan Yu, S.T.H. Storm, Bo Gao